Buy Coal India; target of Rs 376: A C Choksi

A C Choksi is bullish on Coal India and has recommended buy rating on the stock with a target of Rs 376 in its August 14, 2012 research report.

“Coal India has posted its highest-ever quarterly profit of  INR44.69 bn in 1QFY13 on the back of strong offtake, conversion to GCV and better e-auction realization. The profit showed a growth of 7.9% y-o-y and 11.4% q-o-q. It enabled the company to beat street estimates. Although it was impacted due to higher wage cost on account of new wage agreement. Net sales for the quarter ended 30th June 2012 increased by 13.8% to INR165 bn vs INR145 bn  registered in same period previous year.. Sequentially sales were down by 15% from INR194.2 bn. E-auction share increased marginally over the full year FY12 period to 11.93%. E-auction realization improved by ~14% to INR2,561/tonne.”

“Production and offtake both grew by 6.4% during 1Q FY13. Production was 102.5 MT (down by 29.1% q-o-q ) and Offtake was 113 MT (down 8% q-o-q). The company maintains the target of producing 464 MT and dispatching 470 MT in FY 13. E-auction sales for the quarter were 13.48 MT.  Production for 4 months till July 2012 has grown by 5.3% to 134.27 MT, offtake has grown by 4.98% to 149.05 MT for the same period. Availability of rake has increased by 9.1%-9.2% over previous year, however the the road volume has slightly come down. Offtake for 2QFY13 guided at 113 MT. Company's materialization to power sector stood at 91.4%.”

“On a trailing twelve month basis and at market price of INR348,  CIL is trading at an EV/EBITDA of 10.4(x), P/E of 14.5(x), EV/Sales of 2.5 (x) & P/S of 3.4(x). We maintain BUY rating on the company, we have revised  our target price upwards to  INR376 from earlier INR370,” says A C Choksi research report.  

Bodies Corporate holding more than 50% in Indian cos  

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